Business activity in the U.S. services sector grew more than expected in July. The Institute for Supply Management’s non-manufacturing index rose to 65.1

Analysts had forecast the index to show a drop to 59 from 60.6 in June — but still show the sector expanding.

The July increase is the highest since the inception of the ISM Non-Manufacturing Business Survey in July 1997. The previous high was 63.2 in October 1997.

The service sector expanded as new orders shot up.

The new orders index rose to 66.9 from 57.5, while the employment index showed a slight uptick to 50.7 from 50.3.

However, the price index slipped to 50.6 from 51.4, suggesting that concerns about deflation, or generally declining prices, persist.